Wall St rises as yields ease, Moderna lifts healthcare stocks

By Sinéad Carew and Avinash P

Aug 19 (Reuters) – The main U.S. stock market indexes rose modestly on Wednesday, as easing government bond yields boosted risk appetite while a dramatic rally in shares of vaccine-maker Moderna boosted the healthcare sector.

Investors barely reacted to minutes from the U.S. Federal Reserve’s July meeting, which showed deepening concern about inflation with “several” policymakers ready to raise interest rates. “Many” said a rate hike would be needed if inflation does not decline to the U.S. central bank’s 2% target.

A day after the yield on the 30-year Treasury bond hit its highest level since 2007, the yield fell on Wednesday after the U.S. Treasury announced it would double the size of liquidity support buyback operations for longer-dated bonds.

“The risk-on trade is trying to hang on to the lifeline that Treasury Secretary Bessent sent,” said Carol Schleif, chief market strategist at BMO Private Wealth, noting that riskier assets including high-profile technology stocks had sold off in recent days as bond yields rose.

Concerns over ballooning government debt and rising inflation had pushed global bond yields to multi-decade highs on Tuesday. Schleif said investors were relieved by the government support as higher rates “could potentially impact the AI trade” as technology companies have been issuing debt and equity and using their own cash to fund construction of data centers supporting AI. 

Moderna’s shares surged more than 137% after the company said its personalized mRNA cancer therapy developed with Merck cut the risk of melanoma recurrence and spread in a late-stage trial. Merck shares jumped about 12% and it was the biggest gainer in the blue-chip Dow.

Moderna’s rally boosted healthcare peers such as Novavax, whose shares rose more than 8%, and U.S.-listed shares of BioNTech, which jumped 19%.

The S&P 500 healthcare sector rose more than 3%, hitting a record high and providing the biggest boost to the benchmark index from any of its 11 major industry sectors. The Nasdaq biotechnology index climbed more than 5%.

At 2:22 p.m. the Dow Jones Industrial Average rose 125.61 points, or 0.24%, to 53,469.01, the S&P 500 gained 22.52 points, or 0.29%, to 7,714.28 and the Nasdaq Composite gained 36.11 points, or 0.14%, to 26,325.82. 

Information technology stocks on the S&P 500 dipped 0.6%.

Marvell Technologies shares rose more than 7% after it said it will help develop Google’s in-demand custom chips and has offered the search giant the right to buy a potential $12.2 billion stake.

Marvell was one of the few gainers in the volatile Philadelphia semiconductor index, which fell almost 2%. Google parent Alphabet’s shares were little changed.

Target shares rose 5.8% after the retailer raised its annual sales forecast. Lowe’s shares gained 2.9% even after it trimmed its annual sales growth forecast. Estée Lauder shares jumped 16.7% after the cosmetics maker forecast annual profit above Wall Street estimates.

Brent crude futures rose more than 1% to hit near three-week highs. U.S. President Donald Trump said no talks were taking place with Iran and insisted the Strait of Hormuz was open, contradicting Iran’s assertion that the strait remained shut to shipping.

Advancing issues outnumbered decliners by a 2.16-to-1 ratio on the NYSE, where there were 205 new highs and 78 new lows. On the Nasdaq, 2,870 stocks rose and 1,842 fell as advancing issues outnumbered decliners by a 1.56-to-1 ratio.

The S&P 500 posted 18 new 52-week highs and no new lows while the Nasdaq Composite recorded 99 new highs and 75 new lows.

(Reporting by Sinéad Carew in New York, Avinash P and Purvi Agawal in Bengaluru; Editing by Pooja Desai and David Gregorio)